Denison Mines Corp (TSX: DML) is a uranium exploration and development company with interests focused in the Athabasca Basin region of northern Saskatchewan, Canada.

Key Updates:

• Technical showing a positive signal: On a daily chart, the DML stock has recovered from its recent lows and has sustained near the CAD 1.50 to 1.60 zone for a while, which suggests a consolidation phase. Moreover, the stock price is trading close to the lower range of 20-days Bollinger band, which suggests a possible up move from the current trading level.

One-Year Technical Price Chart (as on February 08, 2022). Analysis by Kalkine Group 

• Increase in Cash balance: At the end of Q3FY21, the company reported its cash balance of CAD 50.8 million, which is significantly higher than CAD 24.9 million in FY20. A higher cash balance denotes better liquidity position and is a key positive.

• Operational updates:
  

1. During the third quarter of FY21, the company-initiated diamond drilling exploration programs at Wheeler River, and the Moon Lake South Project. ~6,500 m of diamond drilling is planned for Wheeler River, with regional exploration drilling expected to be focused on expanding mineralization encountered in 2020.
2. The company also reported the completion of In-Situ Recovery field test activities at Phoenix uranium deposit. The group reported the achievement of commercial-scale production flow rates consistent with those assumed in the pre-feasibility study, which is a key positive.

Risks:

The company is in its initial stage of operations and is yet to report stable revenue source, and continuation of the above trend would likely to dampen the upcoming performance.   

Q3FY21 Income Statement Highlights (Source: Company Report)

• DML announced its quarterly result, wherein the company posted its revenues of CAD 9.5 million, considerably higher than CAD 2.7 million in pcp.
• The company reported an increase in operating costs, higher evaluation expense, partially offset by lower general and administrative expense. Additionally, the company reported the Other income of CAD 34.9 million, as compared to an other expense of CAD 1.3 million in pcp.
• The quarter turned profitable and posted its net profit of CAD 32.8 million, as compared to a net loss of CAD 5.4 million in pcp, due to the above-mentioned reasons.
  

Stock Recommendation:

The company owns ~95 percent stake in the Wheeler River project, which ranks as the largest undeveloped high-grade uranium project in the infrastructure rich eastern portion of the Athabasca Basin region. Moreover, the company reported positive results from the In-Situ recovery field test activities at Phoenix uranium deposit. The stock has given impressive returns of ~12% and ~42% in the last nine months and one year, respectively, which shows increasing investor’s interest for the stock. Hence, considering the recent rice movement, its operational activities, we give a ‘Speculative Buy’ rating on the stock of DML at the closing price of CAD 1.55 on February 08, 2022.

One-Year Technical Price Chart (as on February 08, 2022). Analysis by Kalkine Group 

Technical Analysis Summary

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